Waiver of pension participation: do not underestimate the risks!
Publication date: 10 September 2026
Employers are sometimes approached by employees who wish not to participate in the company pension scheme. Think of a former DGA (director-major shareholder) or an employee who prefers to “arrange it themselves”. The solution may seem straightforward: draft a waiver and have it signed. In practice, however, even a legally sophisticated waiver is not always sufficient and may expose the employer to significant risks.
Is a waiver really a waiver?
An employer may make a pension offer through the employment contract or a separate pension agreement. This can happen upon commencement of employment, but also during employment when a pension scheme is introduced. If an employee does not accept that offer, the term “waiver” is misleading. Legally speaking, the employee is not waiving an existing right. Instead, no pension agreement is concluded in the first place.
Freedom of contract has its limits
Under the principle of freedom of contract, an employer and employee may agree that no pension agreement will be entered into. However, that does not mean that the pension provider will necessarily agree. In the case of mandatory industry-wide pension funds, any waiver is null and void because participation is required by law.
For insured pension arrangements, the administration agreement between the employer and the pension provider will generally stipulate that all employees who fall within the participant definition must be enrolled. Pension providers impose this requirement for a reason: notwithstanding a signed waiver, an employee or surviving dependent may, under certain circumstances, still assert claims against the pension provider. Against that background, it is understandable that insurers and premium pension institutions are generally reluctant to exclude employees from a collective pension scheme. Employers should therefore discuss any proposed exceptions with the pension provider in advance.
In practice, we generally see two possible solutions:
- amending the participant definition in the pension regulations so that the individual concerned does not fall within its scope. Pension providers will generally be willing to accept this approach; or
- the employer and employee agree in writing that no pension agreement will be concluded, typically in the form of a “waiver” or a document prescribed by the insurer. Some pension providers may, depending on the circumstances, be willing to accommodate this approach.
Which route is most appropriate depends heavily on the facts of the particular case. For example, where a former DGA remains employed following the sale of their business, exclusion through the participant definition may be more appropriate, especially where the individual occupies a unique role. In other situations, such as where an employee is already accruing pension benefits elsewhere, the second approach may be more practical, provided the pension provider is willing to cooperate.
Conclusion
A waiver of pension participation is not a standard document that can simply be taken from a drawer and signed. Employers should first establish whether the pension provider is willing to cooperate and, if so, how an exception can be structured.
It is also essential to ensure that the employee has sufficient information to make a well-informed decision. Employers who rely solely on a signature may face unpleasant surprises later on. But that is a topic for another publication!
